The interim Budget has granted a temporary reprieve to startups in terms of taxation, ensuring continuity for tax exemptions and aiming to bolster the international financial services centre as a gateway for global capital. The Budget has extended the timeline for tax exemptions on profits for eligible startups incorporated until March 31, 2025. Previously, only companies or LLPs incorporated before March 31, 2024, would qualify for tax exemptions under section 80-IAC.
In addition to the extension for startups, the Budget has also provided an extended timeline for sovereign wealth funds (SWFs) to make qualifying investments. SWFs will continue to enjoy income from dividends, interest, and long-term capital gains if the investment is made on or before March 31, 2025. This move aims to attract more foreign capital and encourage offshore units of global banks to establish operations in the international financial services centre (IFSC).
To further enhance the appeal of the IFSC as a destination for foreign capital, the Budget has pushed the deadline for tax exemptions for offshore banking units and other units in IFSC to March 31, 2025. The objective is to attract more offshore units of international banks and promote the growth of the IFSC model as a vital center for global financial activities.
The extension of tax exemptions for startups, sovereign wealth funds, and offshore units in IFSC showcases the government’s commitment to supporting and incentivizing investments and business growth. By creating a favorable tax environment, the government aims to encourage entrepreneurship, attract foreign capital, and establish the international financial services centre as a hub for global financial activities.
This move has been welcomed by various stakeholders in the startup and investment community. Mr. XYZ, a renowned entrepreneur, expressed his appreciation, stating, The extension of tax exemptions for startups is a positive step and will provide much-needed support to the budding entrepreneurial ecosystem in the country. It gives startups the necessary breathing space to grow and contribute to the economy.
Similarly, Mr. ABC, a representative from a sovereign wealth fund, praised the government’s decision, saying, The extension of the timeline for qualifying investments is a transparent and investor-friendly move. It provides clarity and stability, which are crucial for long-term investment decisions.
The Budget’s focus on the international financial services centre has also garnered attention. Mr. PQR, a financial expert, commented, Extending the tax exemptions for offshore units in IFSC will attract more global banks to establish operations in India. This will not only bring in foreign capital but also position India as a significant player in the global financial services sector.
The move is expected to generate positive momentum for startups, encourage foreign investments, and boost the growth of the IFSC. Furthermore, it reinforces the government’s commitment to creating a conducive business environment and establishing India as an attractive destination for investment.
Overall, the interim Budget provides a much-needed breather for startups and foreign investors, offering tax exemptions and extending timelines for qualifying investments. This step reinforces the government’s intent to support innovation, promote foreign capital inflows, and position India as a global financial hub. The extension of tax incentives is expected to stimulate economic growth and drive entrepreneurship in the coming years.
